Petitioners Brief — Michigan v. Envtl. Prot. Agency, 135 S. Ct. 702 (2014) (No. 14-46)

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STATE OF MICHIGAN, ET AL..,

Petitioners,

Vv.

ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

OPENING BRIEF OF PETITIONER

THE NATIONAL MINING ASSOCIATION

CARROLL W. MCGuFFEY II PETER S. GLASER

JUSTIN T. WONG Counsel of Record

TROUTMAN SANDERS LLP TROUTMAN SANDERS LLP

600 Peachtree Street, NE 401 Ninth Street N.W.

Suite 5200 Suite 1000

Atlanta, GA 30308-2216 Washington, D.C. 20004

(202) 274-2998

Peter.glaser@

troutmansanders.com

Counsel for Petitioner

January 20, 2015

TCLS 2 8 AT TT LE ARETE SE AMS,

WALSON-EPEs PRINTING Co., INC. ~ (202) 788-0086 — WasinGcTon, D.C. 20002

QUESTION PRESENTED

Whether the Environmental Protection Agency

unreasonably refused to consider costs in

determining whether it is appropriate to regulate

hazardous air pollutants emitted by electric utilities.

RULE 24.1 STATEMENT

The following were parties to the proceedings

in the U.S. Court of Appeals for the District of

Columbia Circuit:

The National Mining Association, the

petitioner on review in No. 14-49, was a petitioner

and a respondent-intervenor below.

The respondent herein, which was the

respondent below, is the United States

Environmental Protection Agency.

Additional petitioners below were the Utility

Air Regulatory Group; White Stallion Energy Center,

LLC; American Public Power Association; ARIPPA;

Chase Power Development, LLC; Edgecombe Genco,

LLC; FirstEnergy Generation Corporation; Gulf

Coast Lignite Coalition; Institute for Liberty;

Julander Energy Company; Kansas City Board of

Public Utilities; Midwest Ozone Group; National

Black Chamber of Commerce; Oak Grove

Management Company, LLC; Peabody Energy

Corporation; Puerto Rico Electric Power Authority;

Spruance Genco, LLC; State of Alabama; State of

Alaska; State of Arizona; State of Arkansas, ex rel.

Dustin McDaniel, Attorney General; State of Florida;

State of Idaho; State of Indiana; State of Kansas;

State of Michigan; State of Mississippi; State of

Missouri; State of Nebraska; State of North Dakota;

State of Ohio; State of Oklahoma; Commonwealth of

Pennsylvania: State of South Carolina; State of

Texas; Texas Commission on Environmental Quality;

Texas Public Utility Commission; Railroad

Commission of Texas; State of Utah; Commonwealth

of Virginia; State of West Virginia; State of Wyoming:

Terry E. Branstad, Governor of the State of lowa on

behalf of the People of lowa; Jack Conway, Attorney

General of Kentucky; Tri-State Generation and

Transmission Association, Inc.; United Mine Workers

of America; West Virginia Chamber of Commerce,

Inc.; Georgia Association of Manufacturers, Inc.;

Indiana Chamber of Commerce, Inc.; Indiana Coal

Council, Inc.; Kentucky Chamber of Commerce, Inc.;

Kentucky Coal Association, Inc.; North Carolina

Chamber; Ohio Chamber of Commerce; Pennsylvania

Coal Association; South Carolina Chamber of

Commerce; The Virginia Chamber of Commerce; The

Virginia Coal Association, Incorporated; West

Virginia Coal Association, Inc.; Wisconsin Industrial

Energy Group, Inc.; Wolverine Power Supply

Cooperative, Inc.; Chesapeake Climate Action

Network; Conservation Law Foundation;

Environmental Integrity Project; and Sierra Club.

Respondent-intervenors below (with respect to

certain petitions for review) were Commonwealth of

Massachusetts; State of California; State of

Connecticut; State of Delaware; State of Illinois;

State of Iowa; State of Maine; State of Maryland;

State of Minnesota; State of New Hampshire; State of

New Mexico; State of New York; State of North

Carolina; State of Oregon; State of Rhode Island;

State of Vermont; City of Baltimore; City of Chicago;

City of New York; District of Columbia; County of

Erie, New York; Calpine Corporation; Chase Power

Development, LLC; Exelon Corporation; National

Grid Generation LLC; Public Service Enterprise

Group, Inc.; Gulf Coast Lignite Coalition; Institute

for Liberty; Lignite Energy Council; National Black

Chamber of Commerce; National Mining Association;

Oak Grove Management Company, LLC; Peabody

Energy Corporation; Sunflower Electric Power

Corporation; Tri-State Generation and Transmission

Association, Inc.; Utility Air Regulatory Group; White

Stallion Energy Center, LLC; American Academy of

Pediatrics; American Lung Association; American

Nurses Association; American Public Health

Association; Chesapeake Bay Foundation; Citizens

for Pennsylvania’s Future; Clean Air Council;

Conservation Law Foundation; Environment

America; Environmental Defense Fund; Izaak Walton

League of America; National Association for the

Advancement of Colored People; Natural Resources

Council of Maine; Natural Resources Defense

Council; Ohio Environmental Council; Physicians for

Social Responsibility; Sierra Club; and Waterkeeper

Alhance.

A respondent below (with respect to certain

petitions for review) was Lisa Perez Jackson,

Administrator, United States Environmental

Protection Agency. Ms. Jackson ceased to hold the

office of Administrator, United States Environmental

Protection Agency, on February 15, 2013; that office

is currently held by Gina McCarthy, Administrator,

United States Environmental Protection Agency.

RULE 29.6 STATEMENT

The petitioner does not have a parent

company, and no publicly-held corporation has a 10%

or greater ownership interest in the petitioner.

TABLE OF CONTENTS

QUESTION PRESENTED .......................s000sseeeeeeees

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OPINIONS AND ORDERS BELOW......................

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STATEMENT OF THE CASE......................0c0000005

SUMMARY OF ARGUMENT .....................ceccee00e8

1. On Its Face, EPA’s Decision to

Ignore the $9.6 Billion Annual

Cost of the Rule Was

Se eee ret ae

II. The Panel’s Contextual

Statutory Analysis Cannot Save

A. The Panel Failed to

Examine Section

7412(n)(1)(A) Within the

Context of the CAA as a

B. The Panel Misread Section

7412(n)(1)(A) Within Its

Context in Section 7412.........

Ill. Alternatively, Regardless of

EPA’s Treatment of Other

HAPs, EPA’s Refusal to

Consider Costs in Deciding to

Regulate Acid Gases Was

Unreasonable and Makes EPA's

Acid Gas Regulation Unlawful. .......... 37

A. Failing to Consider Costs in

Deeming It Appropriate to

Regulate Acid Gases Is Not

Remotely Defensible. ................ 38

B. EPA’s Decision to Regulate

Acid Gas Emissions Did

Not Become Reasonable

Simply Because the Agency

Chose to Regulate Other

Electric Generator HAP.z.......... 42

a Riv icetidernitotnsionsnnsnanaienanmncnieninntniutioienaitis 45

TABLE OF AUTHORITIES

Page(s)

CASES

Ali v. Federal Bureau of Prisons,

ft RARER SSE AIRS sere a Poe ele 33

Am. Corn Growers Ass'n v. EPA,

BA BY Fc ———— PaRR EERE peer enue 30

Am. Tobacco Co. v. Patterson,

"Ti GID, HEE ITED cclcinstacuahaidetsieabindesdetiiadanduoiusiad 19

Bait. Gas & Elec. Co. v. NRDC,

ee ee We ED iicscieibtcntaicca ces bnilyalebuittinaiaicamedaiaiadani 40

Chevron U.S.A., Inc. v. Natural Resources

Defense Council, Inc.,

og eR fd eee 2, 22, 23

Christopher v. SmithKline Beecham Corp.,

Se es IE sicintndeiislaceestiescatdiniabdessumeebatmnadeh 22

Coal. For Responsible Regulation v. EPA,

ee 8 f tolls % —. Saeeeeos eee 44

Ctr. for Biological Diversity v. EPA,

749 F.3d 1079 (D.C. Cir. 2014) ..............0.......2.2... 29

Entergy Corp. v. Riverkeeper, Inc.,

ee a cia ialicbaeibaeiibal 37

EPA v. EME Homer City Generation, L.P.,

ok ef | RRR eer 7, 22, 30

FCC v. Fox TV Stations, Inc.,

I i I fi ila ae ae S Ss

FDA v. Brown & Williamson Tobacco Corp.,

Be Ey Pe ID etsseisetisksacsinhaccones siiccocs,

FDIC v. Meyer,

sorry ogc Spd bg, CO TE IIE

Harrison v. PPG Industries, Inc.,

Pe A PE IID icvecisnindscsuscemncichansi cn

Hibbs v. Winn,

I Se He I rec ivsciticccssccotcersenieiieice

Massachusetts v. United States DOT.

93 F.3d 890 (D.C. Cir. 1996) ........0.000 21,

MCI Telcomms. Corp. v. AT&T Co.,

SPP PTE CNET UII citesctssnstnsfsticeuainasineiiscncnucs no.

Motor Vehicle Manufacturers Ass’n v. State

Farm Mutual Auto. Insurance Co..,

SD I CRD osc siveiaithbceincracssccvnsesecsenes..cck 23,

Natl Cable & Telecomms. Ass'n v. Brand X

Internet Servs.,

PU Pe PT CID osc cesovececcesevsssesoseveesacceésoesece,

Nat? Lime Ass’n v. EPA,

233 F.3d 625 (D.C. Cir. 2000) o0......oeeeccccccccccs-ce...

New Jersey v. EPA,

517 F.3d 574 (D.C. Cir. 2008) ........0..00000...... 4,

New Process Steel, L.P. v. NLRB,

Nr Oras IM ck SY

NRDC v. EPA,

749 F.3d 1065 (D.C. Cir. 2014) oo...eccccccccccccccces

Roberts v. Sea-Land Servs.,

I ac 36

Rusello v. United States,

I RII, TRIE sti aiiiacciat ndicia iain 36

United Savings Ass'n of Texas v. Timbers of

Inwood Forest Associates, LTD,

484 U.S. 365 (1988) ....... EBs APES RG ESTES TAS OB Sao 24

United States v. Atl. Research Corp.,

Ne a ae eaeplisamads 24

Utility Air Regulatory Grp., v. EPA,

ef SERS Oe 2, 19, 21

Whitfield v. United States,

SN: SEE EES, HITED cicnsubnaicvnncintnicxnuceansaiascuciees 36

STATUTES

ee i no oss 15

ESR REIRSON BA ESRI ILE icectgnt MNase Se a BOE 4

RR te ID ccs cenaieatinsch eaten cnceeiocaicatan 7

ree Se ee 40

wus tes... 22, 23, 41

ee en ere ee 7

I ee ee iamnianidois 1,29

| DL Gg Rieke habe Die Sct a Searched w asst passim

42 U.S.C. § 7412(a)

en te I ate ee 2s 4, 36, 39

ee Ses Piedad 4, 9, 10, 35

Re a te SID skciicictsortscacinleebauaesbtiniacscuamchcccas 11

ee A ne PE eke aneeeanL 4, 33, 34, 35

ATR Re | el passim

Oe Eas Te WP I Pe insieriecdesctcckserntibnctnictecintcsn 28

a A Ee eae een a 30

muse 6 eee... 30

es ec catsciniceudcuensacutocunbane icastiancnivobiel iia cizes 7, 30

Cg Te RA SES Ur Le 6, 29

BUS OW Mile 5

Acid Precipitation Act of 1980, P.L. 96-294............ 5, 6

REGULATIONS

I a I atest iccscertasbacecanencdbnin creat tts 29

FEDERAL REGISTER NOTICES

65 Fed. Reg. 79,825 (Dec. 20, 2000) ....................20.-.... 9

op, & mt te ieee 9

69 Fed. Reg. 4,652 (Jan. 30, 2004) ........... oe. 9

70 Fed. Reg. 15,994, 15,999 (Mar. 29, 2005)............... 5

ne Ns A I serecedicee pococcedatuiciinn \decmieessasemterndes 12

a, ie a I ir i i 34

ch. BR ED eee ee eee eal 9,16

FP es I HI TR I iterated cet e eee eae e 29, 30

ss ee aint hine oe hbeticconcnnc oe! 28

Jt, S&S 8 | | __. pS ReS eee emir ae, mere ROLES 38

76 Fed. Reg. 24,976, 25,016 (May 3, 2011) ............... 12

tO SRR ameter een ree Re reeves reed de 21

(tO SY RRR er oe tee Pe 16

ee es I Te I diehcenbibechcncdenss chet erode baccs 27

ee ee I I oii ne 13

Se en Ok I Seco 14, 40

Pe eee: Oe I eee re ae. 25, 38

ee ee I HE a I sensi ca c ccacsenseccechigipevbciaibicaite 39

76 Fed. Reg. 48,208, 48,215 (Aug. 8, 2011)............... 30

76 Fed. Reg. 52,388 (Aug. 22, 2011).........0......000000.... 31

76 Fed. Reg. 81,728 (Dec. 28, 2011) ....0........ccce en. 31

77 Fed. Reg. 9,304, 9,306 (Feb. 16, 2012) ......... passim

Oe ee es, Oe Ce a ee 3, 41

Os A TD I oi sierseccdictaidieecteatincclo acne oe 12, 25

cia, & OF) Rae ce 3, 11, 17, 42

77 Fed. Reg.

Oe NU sccethniceteasincencitoernmatcnseiiesetenees 34

Oe IU ccscteniicecnesnnis tc cusesaserbievcincdaars 12

ee eetereienibccadneseinidenteaaeneecions 1, 2, 16

| ___ ReeRAEEES SANE y 21 cee ea 12, 42

Oe IN ceclacistedictsstchecaseniatetdesanedeonries 12

reticence nnenidiiiouinntieemeteiineiiiiecaens 39

Oe SD fait iksacap sisenciconisancesicitaseighbasinacwadle 11

OE I eich ecinsatrabsatetceantnmabilcbeedpnameceitac 13

I shiactecectscechettiduectacecenlenicesinieiietonants 34

Reinet & Sheth Riscietn er aed ero ETE 15

BOAR ALINE ELSON Are Reed meee eet 15

fT” RERERES RE RENN RE EO CN anther eshte 2 41

14,604 (Mar. 12, 2012) .............c.cccceres 31

20,218, 20,263 (Apr. 3, 2012) ............... 29

Le Ree 31

ga at tc ie Paseo ahr 31

39,425 Guly 3, 2012) .............2......02..000 31

Re 31

50,9396 (Aug. 23, 2012).......................... 31

FE i I iseicirncirabnernectcipersecnce 31

77 Fed. Reg. 72,512 (Dec. 5, 2012) .........cccececccesseeeeees 31

77 Fed. Reg. 74,355 (Dec. 14, 2012) .......................... 31

78 Fed. Reg. 8,706 (Feb. 6, 2013) ........................c0000 31

78 Fed. Reg. 46,142 (July 30, 2013) .........00..0.00000...... 31

79 Fed. Reg. 5,032 (Jan. 30, 2014)

LEGISLATIVE HISTORY

136 Cong. Rec. H12911 (daily ed.

RS SE BR acnnhcGtappumatetecesechasGenns Se ar Ng Cu ae 8, 31

S. Rep. No. 101-228, reprinted in 1990

U.S.C.C.A.N 3385

Statement by President George Bush Upon

Signing S.1360, reprinted in 1990

CE ER) ans ei LE eR 26

SECONDARY SOURCES

Bruce A. Ackerman and William T. Hassler,

Beyond the New Deal: Coal and the Clean

Air Act, 89 Yale L.J. 1466 (1979-1980)..........00...... 7

Dennis D. Hirsch, The National Symposium on

Second Generation Environmental Policy

and the Law: Symposium Introduction:

Second Generation Policy and the New

Economy, 29 Cap. U.L. Rev. 1 (2001)

EIA, Today in Energy, AEO2014 Projects More

Coal-Fired Power Plant Retirements by

2016 Than Have Been Scheduled (Feb. 14,

xiv

JULIE R. DOMIKE AND ALEC C. ZACAROLI, THE

CLEAN AIR HANDBOOK, American Bar

Association Section of Environment, Energy

and Resources 2001 (3d. ed. 2011)

Lauraine G. Chestnut and David M. Mills, A

Fresh Look at the Benefits and Costs of the

US Acid Rain Program, Journal of

Environmental Management, 77 EJENMG

3 252-266 (Nov, 2005)

Thomas W. Merrill, Symposium: Innovations

in Environmental Policy: Explaining

Market Mechanisms, 2000 U. Ill. L. Rev.

iii heh te ee

CO POSS SOS OSS OOSDO SOSH SOS OSODOSOS FIOSSOSOSSOSOSOSOSSESOESOCSESESESEOSOCSCS

INTRODUCTION

The Environmental Protection Agency (‘EPA”

or the “Agency”) asserts that Congress empowered it

to adopt regulations imposing, per the Agency's own

calculations, $9.6 billion in costs annually on

electricity consumers in return for benefits of a mere

$4-$6 million per year.’ But the power to adopt

regulations with such wildly mismatched costs and

benefits cannot be teased out of Congress’ simple

command, in 42 U.S.C. § 7412(n)(1)(A), for EPA to

regulate electric utility hazardous air pollutant

(HAP) emissions only if “appropriate.” No rational

person would spend $960 for something worth 40-60

cents. A decision to do so would be decidedly

inappropriate under any common understanding of

the word.

Perhaps understandably, EPA asserts that it

does not have to offer a reason why spending so much

for so little is a rational decision. 77 Fed. Reg. at

9,327. According to the Agency, the term

“appropriate” is so broad that Congress must have

intended that EPA could simply deem regulatory

costs irrelevant if it so chose. Jd. But the breadth of

the term “appropriate” is precisely the reason that

EPA may not unreasonably narrow its construction of

that term so as to “ignore [the] inconvenient fact[]”

that the regulation has such high costs and such low

1 See “National Emission Standards for Hazardous Air

Pollutants From Coal- and Oil-Fired Electric Utility Steam

Generating Units and Standards of Performance for F ossil-Fuel-

Fired Electric Utility, Industrial-Commercial-Institutional, and

Small Industrial-Commercial-Institutional Steam Generating

Units,” aleo known as the “Mercury and Air Toxics Standards”

or “MATS” rule, 77 Fed. Reg. 9,304, 9,306, Table 2 (Feb. 16,

2012).

benefits. FCC v. Fox TV Stations, Inc., 556 U.S. 502,

537 (2009) (Kennedy, J., concurring). “Even under

Chevron’s deferential framework, agencies must

operate ‘within the bounds of “reasonable

interpretation.” Utility Air Regulatory Grp., v. EPA,

134 S. Ct. 2427, 2442 (2014) (citing Arlington v. FCC,

569 U.S. 1863, 1868 (2013)). See also Chevron

U.S.A., Inc. v. Natural Resources Defense Council,

Inc., 467 U.S. 837, 842-43 (1984).

Of course, Congress could have commanded

EPA to regulate regardless of cost, Whitman v.

American Trucking Ass’ns, Inc., 531 U.S. 457, 469

(2001), but it did not do so here. In the view of both

the Agency, 77 Fed. Reg. at 9,327, anc the divided

Panel below, National Mining Association (“NMA”)

Pet. App. 23a-27a, Congress delegated to EPA the

choice of whether to consider costs. Thus, unlike in

Whitman, here it was EPA that made the decision to

ignore costs, not Congress. Indeed, under the logic of

EPA’s view, Congress’ delegation of authority was so

broad that the Agency could have adopted regulations

costing $1 trillion even if the benefit was a mere $1.

But only last term, this Court reiterated that it

expects Congress to speak clearly if it wishes to

authorize an agency to make decisions of vast

“economic and political significance.” Utility Air

Regulatory Grp., 134 S. Ct. at 2444. Little remains of

that principle if an agency cam convert a

Congressional command to regulate only if

“appropriate” into a green light for imposing massive

costs for little benefit, while disclaiming the

responsibility to consider costs at all.

EPA's decision is so irrational that it can be

explained only by the Agency’s desire to achieve what

it calls the “co-benefit” of coincidentally reducing

other emissions that EPA is not authorized to

regulate under Section 7412. 77 Fed. Reg. at 9,305-

06. EPA asserted that the value of these co-benefits

exceeds the $9.6 billion in costs. Jd. But, at least for

the purpose of defending its rule in court (if not in the

court of public opinion”), the Agency conceded that,

consistent with Section 7412(n)(1)(A), it could not and

hence did not consider these asserted non-HAP co-

benefits in deciding to regulate. Jd. 9,320. Unable to

bootstrap these asserted co-benefits into a legal

rationale, the Agency is left with a rule with

massively disproportionate costs and benefits that

can be justified only by arguing that Congress left it

in EPA’s hands to decide whether or not to consider

costs, regardless of how high those costs may be.

EPA, however, cannot make the case that Congress

delegated such enormous power to the Agency.

OPINIONS AND ORDERS BELOW

The opinion of the D.C. Circuit is reported at

748 F.3d 122 and reproduced at NMA Pet. App.. la-

68a. The opinion of Judge Kavanaugh concurring in

part and dissenting in part is reproduced at NMA

Pet. App. 68a-98a. The MATS rule is reproduced at

NMA Pet. App. 196a-1160a.

2 See EPA press release leading with the asserted co-benefits of

the rule.

http://yosemite.epa.gov/opa/admpress.nsf/bd 4379a92ceceeac8525

735900400c27/bd8b3f37 edf57 16d8525 796d005dd086!Open Docu

ment (last visited January 16, 2015).

JURISDICTION

The court of appeals rendered its decision on

April 15, 2014. On November 25, 2014, the Court

granted three petitions for writs of certiorari. This

Court has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS

Section 7412 is reproduced at NMA Pet. App.

101la-195a.

STATEMENT OF THE CASE

F As part of the comprehensive 1990

Clean Air Act (“CAA”) Amendments, Congress

rewrote how EPA should regulate HAPs. 42 U.S.C. §

7412. See New Jersey v. EPA, 517 F.3d 574, 581-83

(D.C. Cir. 2008). Congress listed 189 HAPs, 42

U.S.C. § 7412(b), and directed EPA to create a list of

categories of sources that emit those HAPs above

statutorily-defined thresholds. 42 U.S.C. § 7412(a) &

(c). Congress further directed EPA to establish HAP

control standards for each of the source categories

that EPA listed. 42 U.S.C. § 7412(d).

Congress, however, adopted a _ different

regulatory scheme for HAPs emitted by electric

generating units. In 42 U.S.C. § 7412(n)(1)(A),

Congress required EPA to perform a study of the

“hazards to public health” that electric generator

HAP emissions may pose “after imposition of [other]

requirements of the CAA. Congress directed that

the study also include a report on “alternative control

strategies for emissions which may warrant

regulation under this section.” /d. Congress

instructed EPA to regulate electric generator HAP

emissions only if, considering the results of that

study, the Agency “finds such regulation is

appropriate and necessary.” Id. (emphasis added).

Congress treated electric generators differently

from other source categories of HAP emissions

because, as EPA has reported, the 1990 CAA

Amendments contained a number of other programs

which would have the effect of reducing electric

generator HAP emissions. See Revision of December

2000 Regulatory Finding on the Emissions of

Hazardous Air Pollutants from Electric Utility Steam

Generating Units and the Removal of Coal- and Oil-

Fired Electric Utility Steam Generating Units from

the Section 112(c) List, 70 Fed. Reg. 15,994, 15,999

(Mar. 29, 2005). These programs, while targeted at

non-HAP emissions, would require utilities to install

pollution controls that would also remove HAPs. Jd.

at 16,003 (citing Utility Study and other evidence to

show that technologies used to control sulfur dioxide

(“SO2”), nitrogen oxide (“NO,”) and particulate matter

also control HAPs).

Chief among these programs were those

addressing electric generator emissions that lead to

acid deposition. 42 U.S.C. §§ 7651-765lo. Concerned

about the highly publicized problem of “acid rain,”

Congress in the 1990 amendments adopted the

groundbreaking Title [V Acid Deposition Control

program. S. Rep. No. 101-228 (“Senate Report”) at

261-337 (1989), reprinted in 1990 U.S.C.C.A.N. 3385,

3645-3720 (explaining purposes and requirements of

program). The program built on ten years of analysis

initiated with enactment of the Acid Precipitation Act

of 1980, P.L. 96-294, which authorized the National

Acid Precipitation Assessment Program and provided

for a twelve-agency process for assessing the acid rain

issue.

In Title IV of the CAA, Congress addressed

what it considered to be the principal cause of

environmental acidification, electric utility emissions

of both SOs and, to a lesser extent, NO,. Senate

Report at 261. SOs can convert in the atmosphere to

fine particle sulfate, which, when interacting with

water (fogs, clouds, mist, rain or surface moisture),

can convert to sulfuric acid. Jd. at 261-62. Similarly,

NO, can convert in the atmosphere to fine particle

nitrate, which, when interacting with water, can

create nitric acid. Id. at 262-63. Electric generators

are the nation’s largest source of SOz emissions and

one of the largest sources of NO, emissions. Id. at

282. Title IV established an innovative cap-and-trade

system for electric generator SOz and NO, emissions

as a way of cost-effectively and efficiently reducing

those emissions. Id. at 320.

Congress also made numerous changes to CAA

Title I to address utility emissions that may result in

acid rain and which may cause other health or

environmental impacts. First, because acid

deposition results from air pollutants that, in the

process of being transported downwind, can change

their chemical properties in the atmosphere,

Congress changed the CAA definition of “welfare” —

and thus extended the reach of the National Ambient

Air Quality Standards (“NAAQS”) program — to

address effects caused by “transformfed]” and

“convert[ed]” pollutants. 42 U.S.C. § 7602(b)

(defining public “welfare”) and Senate Report at 76

(explaining the need to expand the definition of

“welfare”); see also 42 U.S.C. § 7409(b)(2) (secondary

NAAQS to be set at a level protective of the “public

welfare”). Second, Congress further strengthened the

“good neighbor” provision of the CAA by authorizing

EPA to invoke that provision where transported

pollution “significantly contributes” to downwind

nonattainment of a NAAQS, rather than only where

an individual upwind source actually causes a

downwind NAAQS violation. 422 USC. §

110(a)(2)(D)@)@; EPA v. EME Homer City

Generation, L.P., 134 S. Ct. 1584, 1595 (2014); Senate

Report at 75-76 (explaining reason for amending

“good neighbor” provision). Finally, Congress

adopted a provision to allow EPA to regionalize its

approach to visibility impairment, recognizing that

the same pollutants that cause water-body

acidification also impair visibility. 42 U.S.C. § 7492;

Senate Report at 275.

These 1990 CAA Amendment provisions built

on a Title I regulatory structure that already had

long focused on restricting emissions from electric

utility units that use coal as a fuel. See, e.g., Bruce

A. Ackerman and William T. Hassler, Beyond the

New Deal: Coal and the Clean Air Act, 89 Yale L.J.

1466 (1979-1980). Thus, numerous other CAA

programs, such as those requiring new and modified

sources to install pollution control equipment, could

be expected to reduce coal generation emissions. See,

e.g., 42 U.S.C. § 7411 (mew source performance

standards for new and modified facilities), id., § 7475

(preconstruction permit requirements for new and

modified facilities located in attainment areas), and

id., § 7503 (preconstruction permit requirements for

new and modified facilities located in nonattainment

areas).

Given the effect these programs were expected

to have in reducing HAP emissions, Congress

believed both that electric generator HAP standards

might not be warranted and that excessive regulation

might overburden the electric utility industry (and

therefore consumers). See 136 Cong. Rec. H12911,

12934 (daily ed. Oct. 26, 1990) (statement of

Congressman Oxley that the conferees adopted

section 7412(n)(1)(A) “because of the logic of basing

any decision to regulate on the results of scientific

study and because of the emission reductions that

wili be achieved and the extremely high costs that

electric utilities will face under other provisions of

the new Clean Air Act amendments.”).

4 EPA completed the study called for by

Section 7412(n)(1)(A) (‘Utility Study”) in 1998. The

study concluded that “mercury from. coal-fired

utilities is the HAP of greatest potential concern.”

Joint. App. 110. The study examined two acid gases

that are directly emitted by electric generators,

hydrogen chloride and hydrogen fluoride, and found

no health impacts. Joint App. 105. EPA noted that

these acid gas emissions “may” contribute to

environmental harms but recognized that these

impacts could also be addressed through other

provisions of the Act. Jd.

Following the Utility Study, EPA in 2000,

without rulemaking and without providing notice or

taking comment, issued a non-final “notice of

regulatory finding” that it was “appropriate and

necessary to regulate electric generator HAP

emissions. Regulatory Finding on the Emissions of

Hazardous Air Pollutants from Electric Utility Steam

Generating Units, 65 Fed. Keg. 79,825 (Dec. 20,

2000). EPA’s finding was based on the hazards to

public health that EPA perceived from mercury

emissions from coal-fired electric generators and, to a

lesser extent, the effects of nickel emissions from oil-

fired electric generators. Id. at 79,827, 79,828, Table

1. EPA made no findings as to acid gas emissions

other than to briefly note that these emiss.ons are of

“potential concern and may be evaluated further

during the regulatory development process.” Id. at

79,827. EPA then listed electric generators for

regulation under Section 7412(c) but deferred

establishing control standards. National Emission

Standards for Hazarious Air Pollutants: Revision of

Source Category List Under Section 112 of the Clean

Air Act, 67 Fed. Reg. 6,521 (Feb. 12, 2002).

3. In 2004, EPA undertook rulemaking for

the first time to evaluate whether regulating electric

generator HAP emissions under Section 7412(n)(1)(A)

was “appropriate and necessary.” Proposed National

Emission Standards for Hazardous Air Pollutants;

and, in the Alternative, Proposed Standards of

Performance for New and Existing Stationary

Sources: Electric Utility Steam Generating Units, 69

Fed. Reg. 4,652 (Jan. 30, 2004). After analyzing the

language and legislative history of Section

7412(m)(1)(A) in depth, EPA concluded that

compliance costs should be considered in determining

whether regulation is “appropriate.” 70 Fed. Reg. at

16,000-01. As a result, EPA determined that “it

might not be appropriate” to regulate electric

generator HAP emissions “if the health benefits

expected as the result of such regulation are marginal

and the cost of such regulation is significant and

therefore substantially outweighs the benefits.” Id.

EPA further concluded that because Congress

provided that the predicate Section 7412(n)(1)(A)

Utility Study must address possible health effects but

made no mention of environmental effects, EPA

should base its “appropriate and necessary” finding

on the need to protect public health and not the

environment as well. Id. at 15,998.

Based on its analysis of Section 7412(n)(1)(A)

and the record hefore it, EPA determined that it was

not “appropriate and necessary” to regulate electric

generator HAP emissions. Although the Agency said

that it could consider costs in making this

determination, in the end it did not do so because it

found that none of the HAPs emitted by electric

generators pose a material health risk. As to acid

gases, EPA stated that it had done further modeling

of the acid gases that the Utility Study identified as a

possible concern (hydrogen chloride and hydrogen

fluoride), as well as chlorine, and this “modeling

indicates that individuals are not exposed to acid gas

emissions from Utility Units at concentrations which

pose hazards to public health.” Jd. at 16,007. EPA

similarly found an absence of health concern for

electric generator dioxin and trace metal emissions.

Id. at 16,007. For electric generator mercury

emissions, EPA decided to regulate those emissions

under a different CAA program and determined that

any remaining health impacts would be insignificant.

Id. at 16,002. Having thus determined that it was

not “appropriate and necessary” to regulate any

electric generator HAP emissions, EPA removed

electric generators from the Section 7412(c) list. Id.

at 15,994.

EPA’s 2008 “delisting” decision, however, was

vacated by the D.C. Circuit in New Jersey v. EPA, 517

F.3d at 581-83, on the ground that EPA had not made

the delisting findings required by Section 7412(c)(9).

4. On remand of New Jersey, EPA

promulgated the MATS rule at issue here. Reversing

course, EPA determined that it was “appropriate and

necessary’ to regulate electric generator HAP

emissions. The Agency concluded that its original

2000 “appropriate and necessary” finding was valid

when made, 77 Fed. Reg. at 9,320, and that new

information further and independently justified that

finding, id. at 9,362-64. Based on its “appropriate

and necessary” finding, EPA promulgated Section

7412(d)(3) Maximum Achievable Technology

(“MACT”) standards for electric generator emissions

of mercury, trace metals, and acid gases, 77 Fed. Reg.

at 9,367-68, Tables 3 & 4, and Section 7412(h) work

practice standards for emissions of dioxin and furan,

id. at 9,369.

In examining the appropriateness and

necessity of regulating electric generator HAP

emissions, EPA analyzed various sources of

information as to the impact these substances may

have both on public health and the environment. The

other petitioner briefs address the analysis EPA

undertook as to mercury and trace metals. In

contrast to these other HAPs, where EPA produced

some additional studies following its 2005

rulemaking, EPA did not conduct any further

analysis of the potential impact of electric generator

acid gas emissions. EPA conceded that electric

generator acid gas emissions do not pose a significant

health risk. National Emission Standards for

Hazardous Air Pollutants From Coal- and Oil-Fired

Electric Utility Steam Generating Units and

Standards of Performance for Fossil-Fuel-Fired

Electric Utility, Industrial-Commercial-Institutional,

and Small Industrial-Commercial-Institutional

Steam Generating Units, 76 Fed. Reg. 24,976, 25,016,

(May 3, 2011). It claimed, however, that “acid gas

HAP pose a hazard to the environment because they

contribute to aquatic acidification.” 77 Fed. Reg. at

9310. The Agency, however, did not provide any

analysis of why acid gas emissions, in the amount

emitted by electric generators, pose a meaningful

acidification risk, particularly given the significant

emission reductions already achieved via the CAA

Title ITV Acid Deposition Control and other CAA

programs. The only empirical evidence that EPA

cited of potential environmental harm was a study of

acid deposition in the United Kingdom, which

obviously did not examine whether the electric

generators that will be subject to the rule here emit

acid gases in sufficient quantity to create a

significant environmental impact. 77 Fed. Reg. at

9,361-62.

To justify regulating acid gas emissions, EPA

made two key interpretations of Section

7412(n)(1)(A). First, EPA reversed its previous

position that Congress’ reference to health but not

environmental effects in Section 7412(n)(1)(A) meant

that the “appropriate and necessary” determination

should be restricted to health impacts. 70 Fed. Reg.

at 15,998. EPA now decided that it could determine

that regulation was “appropriate and necessary”

based solely on environmental vapact. 77 Fed. Reg.

at 9,324-25. In addition, perhaps in recognition of

the weakness of its evidence that acid gases cause

environmental harm, EPA concluded that it only had

to make an “appropriate and necessary” finding for

one HAP in order to regulate all HAPs that electric

generators emit. Id. at 9,325-26.

EPA estimated that the annual compliance

cost of the MATS rule would be $9.6 billion, 77 Fed.

Reg. at 9,306, Table 2, making it “among the most

expensive rules that EPA has ever promulgated.”

NMA Pet. App.78a (Kavanaugh, J., concurring in

part and dissenting in part and quoting JAMES E.

MCCARTHY, CONGRESSIONAL RESEARCH SERVICE,

R42144, EPA's UTILITY MACT: WILL THE LIGHTS GO

OuT? 1 (2012)). More than half of these control costs

results from the need to install or upgrade expensive

SOz control equipment to reduce acid gas emissions.®

EPA found that the same technology that is used to

control SO2 emissions (flue gas desulphurization

equipment) is equally and perhaps even more

effective in removing acid gases as well. 76 Fed. Reg.

at 25,014. Given the effectiveness of SOz control

equipment in preventing acid gas emissions, the final

rule provided that generators could comply with the

rule by meeting an SOz emission standard rather

than meeting an acid gas-based standard. 77 Fed.

Reg. at 9,368.4

8 See NMA Pet. App. 512a and Joint App 807-10 (comments of

Utility Air Regulatory Group).

‘ It is not clear exactly which acid gases the final rule regulates.

The rule states that generators can meet a standard for either

SOs: or hydrogen chloride as a surrogate for other unnamed acid

gases. 77 Fed. Reg. at 9,367-68. In the proposed rule, EPA

refers to acid gases as “includ[ing]” hydrogen chloride, hydrogen

fluoride, chlorine, and hydrogen cyanide. 76 Fed. Reg. at

25,004.

In contrast to the rule’s $9.6 billion annual

cost, EPA estimated that the rule would produce only

$4-$6 million annually in monetized benefits in

reducing HAP emissions. Id. All of this asserted

benefit comes from reducing mercury emissions; none

comes from reducing acid gas emissions. 77 Fed. Reg.

at 9,306, Table 2.

For comparison purposes, EPA estimates that

the annual cost of the Title [TV acid rain SOz trading

program is $1.0-$1.4 billion. Joint App. 926. The

trading program capped electric generator SOz

emissions in 1990 at 8.95 million tons, about half of

their 1990 level of 17.3 million tons,5 In contrast, the

acid gases addressed by the MATS program amount

to only a few hundred thousand tons per year, 76

Fed. Reg. at 25,005, Table 4, and represent only a

minuscule percentage of emissions that have the

potential to create acidification impacts.£ Yet, as

noted, the controls that utilities will install to address

those emissions constitute about one-half of the cost

of the $9.6 billion MATS program. See supra at n. 3.

Given the cost of MATS, numerous energy and

financial analysis institutions predicted that the rule

5’ Lauraine G. Chestnut and David M. Mills, “A fresh look at the

benefits and costa of the US acid rain program,” Journal of

Environmental Management 77 EJENMG 3 252-266 (November

2005).

® Table 4 of the proposed rule, 76 Fed. Reg. at 25,006, shows that

the predominate electric generator acid gas emissions is

hydrogen chloride. But electric generator hydrogen chloride

emissions and indeed all domestic hydrogen chloride emissions

represent lees than one percent of the acidifying potential of al!

emissions in the United States. Comments of the Electric Power

Research Institute, Joint App. 413-14, 419-22.

would lead to a wave of retirements of coal-fueled

electric generators. Joint App. 182-83 (comments of

the National Mining Association) For instance, the

Energy Information Administration (“EIA”), the

agency within the Department of Energy responsible

for energy analysis, predicted 45-73 gigawatts of

retirements from a fleet of 317 gigawatts. Id. The

North American Electric Reliability Council, the

entity chartered by the Federal Energy Regulatory

Commission to ensure the reliability of the national

grid, 16 U.S.C. § 8240, predicted 33-77 gigawatts of

retirements. Jd. At the end of 2013, EIA’s

comprehensive annual assessment projected that by

2016, when MATS is fully implemented,’ 54

gigawatts of coal-fueled electric generation will not

install control equipment to comply with the rule but

will instead retire.®

EPA deemed the imbalance between costs and

benefits of the rule to be irrelevant to its analysis.

? The rule provides for a three-year compliance period from April

2012, with the poasibility of a one-year extension. 77 Fed. Reg.

at 9,407, 9,418.

8 EIA, Today in Energy, AEO2014 Projects More Coal-Fired

Power Plant Retirements by 2016 Than Have Been Scheduled

(Feb. 14, 2014), http://www.eia.gov/todayinenergy/detail.cfm?id=

15031. EPA’s own recent modeling projecte that of the total

fleet of 317 gigawatts of coal-fueled generators in 2010 (pre-

MATS), only 244 gigawatte will remain in 2016 (post-MATS), a

decline of nearly one-quarter. Compare EPA’s estimate of the

2010 coal fleet in the MATS Regulatory Impact Analysis at

Table 3-8, with EPA’s updated modeling in connection with its

recently proposed Clean Power Plan showing its current

estimate of the fleet in 2016, see the spreadsheet Proposed

Clean Power Plan_Base Case_ser.xlex, EPA Analysis of the

Proposed Clean Power Plan, IPM Run Files,

http://www.epa.gov/airmarkets/powersectormodeling/cleanpower

plan. html.

Reversing its prior determination that it should

consider costs in determining whether regulation is

“appropriate,” 70 Fed. Reg. at 16,000-01, EPA now

concluded that Congress left it up to the Agency to

decide whether or not to consider control costs, 77

Fed, Reg. at 9,327 (‘nothing about the definition fof

‘appropriate’] compels a consideration of costs.”).°

The Agency justified its decision to ignore costs by

asserting that doing so was reasonable given what it

viewed as Congress’ overriding intent to regulate

HAP emissions as quickly as possible and no matter

the costs involved. Id.

Although it maintained that weighing the costs

and benefits of the rule was irrelevant, EPA produced

an analysis purporting to show that, overall, the

regulation will create $33-$90 billion in benefits. 77

Fed. Reg. at 9,306, Table 2, n. b. Virtually all of this

amount consists of reducing non-HAP emissions,

particularly SO2 emissions, as a “co-benefit” of

reducing HAP emissions..° Jd. As noted, SO:

emissions can convert to fine particle (““PM2s”) sulfate

in the atmosphere. Jd. EPA believes that inhalation

of air with elevated PMzs concentrations can cause

® In the proposed rule, EPA took the position that Congress

barred it from considering costs. 76 Fed. Reg. at 24,989 (“the

better reading of the term ‘appropriate’ is that it does not allow

for the consideration of costs”).

‘© As shown on Table 2, 77 Fed. Reg. at 9,306, only $4-$6 million

of the benefits of the rule is from reducing HAP emissions. Of

the benefits from reducing non-HAP emissions, a smal) amount

comes from reducing carbon dioxide emissions; the rest comes

from reducing atmospheric PMs concentrations. Virtually all of

the benefit of reducing atmospheric PMszs concentrations results

from reducing electric generator SO: emissions; only about 5

percent resulte from reducing electric generator direct emissions

of PMas. Joint. App. 928 (EPA Regulatory Impact Analysis).

increased mortality and morbidity. Jd. at 9,428-

9,432. However, because SOz and fine particles are

not HAPs, EPA states that it cannot and did not rely

on these asserted co-benefits in determining that the

regulation of electric generator HAP is “appropriate

and necessary.” Id. at 9,320.

5. In the decision below, a divided panel of

the D.C. Circuit denied petitions to review the MATS

rule. NMA Pet. App. 1a-68a. The Panel found that

Section 7412(n)(1)(A) gives EPA discretion either to

consider or not consider costs in determining whether

it is “appropriate and necessary” to regulate electric

generator HAP emissions. NMA Pet. App. 23a-25a.

The Panel determined that EPA had reasonably

exercised that discretion in determining not to

consider costs. Jd. Judge Kavanaugh dissented,

arguing that either EPA had unreasonably read the

statute as giving it discretion to ignore costs or it had

unreasonably exercised the discretion that Congress

gave it by choosing to ignore costs. Jd. at 1259-67.

SUMMARY OF ARGUMENT

The EPA unreasonably ignored costs in

determining that regulating HAP emissions from

electric generators is “appropriate.” Although

Congress could have delegated authority to EPA to

ignore costs, it did not do so here. Congress thus did

not authorize the extreme mismatch of costs and

benefits that occurred here. EPA, unreasonably,

chose that path.

The Panel’s contextual analysis erred in failing

to examine Section 7412(n)(1)(A) within the

framework of the CAA as a whole. The CAA contains

numerous regulatory programs, in particular the

Title IV acid deposition program, which required

electric generators to install pollution control

technology which were expected to significantly

reduce HAP emissions. Section 7412(n)(1){A) gave

EPA limited authority to promulgate additional

regulation if “appropriate and necessary” “after

imposition” of those other requirements. Congress

did not intend to authorize EPA to ignore costs in

adopting a far-reaching regulatory program that

would be much more costly than the other programs

it was intended merely to supplement.

The Panel also misconstrued Section

7412(n)(1)(A) within the limited context of Section

7412. Contrary to the Panel's analysis, the

differences between Section 7412(n)(1)(A) and the

rest of Section 7412 emphasize, rather than

undermine, the relevance of cost in a Section

7412(n)(1)(A) “appropriateness” finding.

Finally, regardless of the validity of EPA's

“appropriateness” finding for other HAPs, EPA’s

“appropriateness” finding for acid gases was

unreasonable. Moreover, EPA regulation of other

HAPs does not, in and of itself, make it “appropriate”

for EPA to regulate acid gases.

ARGUMENT

I. On Its Face, EPA’s Decision to Ignore the

$9.6 Billion Annual Cost of the Rule Was

Unreasonable.

EPA acted in a patently unreasonable manner

in choosing to ignore compliance costs. In

authorizing only “appropriate and necessary”

regulation, Congress cannot have intended to

delegate to EPA the power to choose, as a matter of

agency discretion, the wildly disproportionate result

that occurred here, where consumers will be forced to

bear $9.6 billion in costs every year for only $4-$6

million in annual benefit. See MCI Telcomms. Corp.

v. AT&T Co., 512 U.S. 218, 231 (1994) (disapproving

agency statutory interpretation as leading to a

“highly unlikely” outcome); Am. Tobacco Co. v.

Patterson, 456 U.S. 63, 71 (1982) (‘Statutes should be

interpreted to avoid ... unreasonable results

whenever possible.”). Spending so much money for so

little return is not a reasonable exchange. As Judge

Kavanaugh cogently observed, $9.6 billion can be put

to considerably more beneficial public health uses

than the regulation EPA chose here. NMA Pet. App.

78a.

Indeed, the utter irrationality of EPA’s

decision is shown by the fact that, under the Agency’s

logic, it could have ignored the cost of the rule even if

that cost was $1 trillion and the benefit $1. As this

Court reiterated last term, however, “[w]e expect

Congress to speak clearly if it wishes to assign to an

agency decisions of vast ‘economic and political

significance.” Utility Air Regulatory Grp., 134 S. Ct.

at 2444 (citing FDA v. Brown & Williamson Tobacco

Corp., 529 U.S. 120, 159 (2000)). A direction to

regulate if “appropriate” is hardly a clearly spoken

congressional command to regulate regardless of the

mismatch between costs and benefits.

The dictionary defines “appropriate” as

“especially suitable or compatible” or “fitting.”

MERRIAM-WEBSTER ONLINE DICTIONARY,

http://www .merriam-webster.com/

dictionary/appropriate (last visited January 16,

2015). A regulatory scheme that produces costs that

are about 20,000 times its benefits is not one that is

“especially suitable,” “compatible” or “fitting” under

any common understanding of those terms. FDIC v.

Meyer, 510 U.S. 471, 476 (1994) (“we construe a

statutory term in accordance with its ordinary or

natural meaning” unless Congress has otherwise

specified).

Of course, Congress could have required EPA

to ignore costs in determining whether it is

appropriate to regulate, just it has instructed EPA to

be cost-blind in setting NAAQS. See Whitman, 531

U.S. at 469. But neither the Panel nor EPA

interpreted the term “appropriate” as barring the

Agency from considering costs. In their view,

Congress gave EPA the choice to either consider or

not consider costs. NMA Pet. App. 23a-25a. EPA,

thus, must take full ownership of the irrational

outcome here. Moreover, as Judge Kavanaugh

observed, even to the extent EPA somehow could

have devised a rational explanation to justify the

extreme divergence of costs and benefits that

occurred here, EPA did not do so; it simply refused to

consider costs at all. Jd. at 1263.1!

". For instance, although EPA claims that the rule will produce

unquantified benefits, 77 Fed. Reg. at 9,306, Table 2, it did not

try to make the case that those benefits make it appropriate to

regulate. Indeed, it is revealing that, rather than venturing to

explain why $9.6 billion should be spent every year for

unquantifiable benefits, EPA choee to reverse its prior

determination that costs should be considered in a Section

7412(m)(1)(A) determination and instead rested its entire case

for regulation on the notion that all costs (quantified and

unquantified) are irrelevant.

As the Panel found, by using the broad term

“appropriate,” Congress, granted EPA discretion. Id.

at 1237. (‘appropriate” is “open-ended” and

“ambiguous ). But a Congressional grant of

discretionary power is not unbounded. Utility Air

Regulatory Grp., 134 S. Ct. at 2442 (“[e]ven under

Chevron’s deferential framework, agencies must

operate ‘within the bounds of ‘reasonable

interpretation” (citing Arlington v. FCC, 569 U.S. at

1867 (2013) (slip op. at 5)). As the D.C. Circuit itself

has said, “the range of permissible interpretations of

a statute is limited by the extent of its ambiguity;” an

agency cannot “put forth a reading that diverges from

any realistic meaning of the statute.” Massachusetts

v. United States DOT, 93 F.3d 890, 893 (D.C. Cir.

1996). See also Natl Cable & Telecomms. Ass’n v.

Brand X Internet Servs., 545 U.S. 967, 980 (2005)

(“‘[A]mbiguities in statutes within an agency's

jurisdiction to administer are delegations of authority

to the agency to fill the statutory gap in reasonable

fashion.”) (emphasis added). EPA thus cannot treat

Congress’ delegation of power to regulate if

“appropriate” as a blank check to ignore relevant

factors. The extraordinary cost of these regulations

may be an “inconvenient fact[],” but it is also an

obviously important fact that EPA may not ignore

under any common understanding of the term

“appropriate.” FCC v. Fox TV Stations, Inc., 556 U.S.

502, 537 (2009) (Kennedy, J., concurring).

Moreover, EPA illogically assumed that the

breadth of the term “appropriate” gives EPA

discretion to narrow the factors the Agency can

consider in an “appropriateness” finding. 76 Fed.

Reg. at 24,988 (describing the term “appropriate” as

“extremely broad”). But Congress’ use of “broad

language” in the CAA does not demonstrate

“ambiguity”; it “demonstrates breadth.”

Massachusetts, 549 U.S. at 532. Congress’ use of a

broad term like “appropriate” in authorizing EPA to

decide in a particular case whether to regulate

conveys Congress’ intent that EPA -consider all

possibly relevant factors, not an intent to permit EPA

to exclude such an obviously relevant factor as cost.

NMA Pet. App. 83a-85a. See also Christopher v.

SmithKline Beecham Corp., 132 S. Ct. 2156, 2171

(2012) (“broad” statutory term should not be given an

unreasonably limited construction); Harrison v. PPG

Industries, Inc., 446 U.S. 578, 588-89 (1980)

(Congress’ use of “expansive language” contradicts a

more limited reading of a statutory term).

For this reason, the Panel’s reliance on

Whitman, NMA Pet. App. 26a, was misplaced. In

Whitman, this Court found that, as a matter of

Chevron step one analysis, the statutory standard for

setting NAAQS — “requisite to protect the public

health” — is crystal clear that only health effects are

relevant in promulgating a NAAQS. Whitman, 531

U.S. at 471 (Section 7409(b)(1) “unambiguously bars”

EPA from considering costs); see also Chevron, 467

U.S. at 842-43 (1984). Providing for regulation to the

extent “appropriate” is obviously a much more

encompassing grant of authority than regulating as

“requisite to protect the public health,” one that is not

facially limited to public health concerns. See also

EME Homer City Generation, 134 S. Ct. at 1607, n.

21, where the Court, in construing another broad

term, distinguished Whitman and affirmed EPA's

consideration of costs in determining whether upwind

emissions “significantly contribute” to downwind air

pollution.

The distinction between Section 7409(b)(1) and

Section 7412(n)(1)(A), moreover, is not just linguistic;

it is conceptual. In Section 7409(b)(1), Congress asks

EPA to make the scientific determination, what level

of air pollution is “requisite to protect the public

health”? In contrast, in Section 7412(n)(1)(A),

Congress asks EPA to make a policy judgment,

should electric generator HAPs be _ regulated?

Although costs are not relevant in scientifically

determining the level of pollution in the air that is

“requisite to protect the public health,” they are

indisputably relevant and indeed critical in

determining “appropriate” regulatory policy. NMA

Pet. App. 78a (Kavanaugh dissent).

In sum, as Judge Kavanaugh wrote, the result

in this case does not depend on whether EPA’s

authority is examined under Chevron step one or two.

NMA Pet. App. 73a. “In this case, whether one calls

it an impermissible interpretation of the term

‘appropriate’ at Chevron step one, or an unreasonable

interpretation or application of the term

“appropriate” at Chevron step two, or an

unreasonable exercise of agency discretion under

State Farm, the key point is the same: It is entirely

unreasonable for EPA to exclude consideration of

costs in determining whether it is ‘appropriate’ to

regulate electric utilities under the MACT program.”

Id.

Ul. The Panels Contextual Statutory

Analysis Cannot Save the Rule.

The Panel relied on an analysis of Section

7412(n)(1)(A) within the context of Section 7412 in

finding that EPA’s decision to ignore costs was

reasonable. NMA Pet. App. 234-25a. No doubt,

statutory terms must be construed in their proper

context. United Savings Asa’n of Texas v. Timbers of

Inwood Forest Associates, LTD, 484 U.S. 365, 371

(1988). But the Panel’s contextual analysis

contradicts the basic principle of construing a statute

as a whole. Moreover, even focused just on Section

7412, the Panel misconstrued Congress’ intent.

A. The Panel Failed to Examine

Section 7412(n)(1)(A) Within the

Context of the CAA as a Whole.

In seeking Congress’ purpose in Section

7412(m)(1)(A), the Panel's contextual analysis

employed an overly narrow lens, focusing only on

Section 7412 and not on the statute “as a whole.”

United States v. Atl. Research Corp., 551 U.S. 128,

136 (2007). The maxim that statues should be

construed as a coherent whole is particularly on point

here, given that Section 7412(n)(1)(A) expressly

states that the Utility Study should examine the

health impacts of electric generator HAP emissions

remaining “after imposition of the requirements of

this Chapter.” (Emphasis added.) “This Chapter”

refers to Chapter 85 of Title 42 of the U.S. Code; in

other words, the entire CAA as amended by the 1990

Amendments. Viewing Section 7412(n)(1)(A) through

the wide lens of the CAA as a whole confirms the

unreasonableness of excluding costs in determining

whether regulating electric generator HAP emissions

is “appropriate.”

Acid gases provide perhaps the best example of

how the Panel’s failure to look more broadly at the

statute as a whole blinkered its analysis. As stated,

much of the $9.6 billion in regulatory costs yet none

of the $4-$6 million in regulatory benefits results

from controlling those emissions. See supra at n. 10.

EPA concedes that acid gases emitted by electric

generators produce no significant health risk. 76

Fed. Reg. at 25,016 (acid gases do not pose a cancer

risk) & id. (“our case studies did not identify

significant chronic non-cancer risks from acid gas

emissions’). EPA’s entire case for regulating electric

generator acid gas emissions rests on possible

environmental impacts, specifically the possibility

that acid gases could “contribute” to ecosystem

acidification. Id. See also 77 Fed. Reg. at 9,310. But

the notion that Congress in Section 7412(n)(1)(A)

authorized EPA to ignore costs in addressing

acidification overlooks Congress’ concurrent adoption

of a separate Title, the much-heralded and innovative

Title [V program, to address acidification in a cost-

effective way.'?

Ten years in the making following the 1980

congressional authorization of the National Acid

Precipitation Assessment Program, P.L. 96-294, the

12 See generally Thomas W. Merrill, Symposium: Jnnovations in

Environmental Policy: Explaining Market Mechanisms, 2000 U.

Ill. L. Rev. 275; Dennis D. Hirsch, The National Symposium on

Second Generation Environmental Policy and the Law:

Symposium Introduction: Second Generation Policy and the New

Economy, 29 Cap. U.L. Rev. 1 (2001).

Title IV program was seen as a landmark in

environmental regulation, creating a market-based

cap-and-trade program to address acid deposition in a

least-cost manner. As the Senate Report containing

Title [IV as enacted stated, “the allowance system is

intended to maximize the economic efficiency of the

program both to minimize costs and to create

incentives for aggressive and innovative efforts to

control pollution.” Senate Report at 320 (emphasis

added). Title IV represented a rejection of traditional

top-down, command-and-control programs, which

were seen as inefficient, in favor of a market-driven

approach that would achieve the desired emission

reductions at reasonable costs. Jd. As President

Bush stated in his signing statement, “[tjhe

innovative use of market incentives in the bill

represents the turning of a new page in our approach

to environmental problems in this country.... By

employing a system that generates the most

environmental protection for every dollar spent, the

trading system lays the groundwork for a new era of

smarter government regulation; one that is more

compatible with economic growth than using only the

command and control approaches of the past.”

Statement by President George Bush Upon Signing

S.1360, reprinted in 1990 U.S.C.C.A.N. at 3387-1

(emphasis added).

Having promulgated the Title IV cap-and-trade

program to address acid deposition specifically in a

cost-effective manner, it is unlikely in the extreme

that Congress would have simultaneously authorized

EPA to ignore costs in addressing possible remaining

deposition impacts after Title [TV was implemented.

FDA v. Brown & Williamson Tobacco Corp., 529 U.S.

at 133 (statues must be interpreted “as a

symmetrical and coherent regulatory scheme,”

quoting Gustafson v. Alloyd Co., Incorporated, 513

U.S. 561, 569, (1995)). Congress knew that the acid

deposition program not only would reduce SO2 and

NO, emissions, it would reduce HAP emissions as

well. 76 Fed. Reg. at 24,990 (‘It was known at the

time of the 1990 Amendments that the controls used

to reduce emissions of SOs, primarily scrubbers, had

the co-benefit of controlling HAP emissions, including

Hg emissions”.). Moreover, unlike electric generator

SOz and NO, emissions, electric generator acid gas

emissions are not a meaningful contributor to

acidification; they represent less than one percent of

total emissions that contribute to acidification.

Comments of the Electric Power Research Institute

CEPRI’), Joint App. at 413-14, 419-22. The fact

that the acid deposition program that the Agency

wants to impose under Section 7412(n)(1)(A) achieves

little yet costs several times more than Congress’

Title IV acid deposition program, supra at 14 — and

unlike Congress’ program is forcing numerous plants

into retirement, supra at 14-15 ~ further emphasizes

EPA’s unreasonable statutory interpretation. Under

the Panel's interpretation, Section 7412(n)(1)(A)

would become “a tail that would not only wag the dog,

but would continue to wag after the dog died,” or, in

this case, long after the Title [TV program was fully

implemented. New Process Steel, L.P. v. NLRB, 560

U.S. 674, 688 (2010) (Kennedy, J. concurring).!3

\8 Indeed, EPA’s interpretation of Section 112(n)(1A) renders

Title IV a virtual nullity. Title IV is based on a carefully crafted

and complicated system of allowance allocations that permit

some units to “over-control” so that they can sell excess

allowances to units which, by purchasing allowances, do not

have to control at all. JULIE R. DOMIKE AND ALEC C. ZACAROLI,

THE CLEAN AIR HANDBOOK, American Bar Agsaociation Section of

Title [V, moreover, was not the only program

that Congress adopted, both in the 1990 CAA

Amendments and in previous iterations of the CAA,

that were intended to and did result in significant

reductions in electric generator emissions of all types,

including HAPs.!* For instance, NAAQS attainment

programs were expected to reduce HAP emissions.

70 Fed. Reg. at 16,003 (noting the conclusion of the

Utility Study that compliance with the NAAQS for

ozone and particulate matter would require utilities

to install control equipment that would also reduce

HAP emissions). Moreover, the original CAA of 1970

required all new and modified electric generators to

install modern pollution-control equipment for SOz,

NO,, and particulate matter emissions as a condition

to obtaining necessary preconstruction permits. 42

Environment, Energy and Resources 2001, Ch. 12 (3d ed. 2011).

Reflecting cost concerns, the program was implemented in two

phases, phase one beginning in 1995 and phase two in 2000. Id.

at 449. Yet under EPA’s interpretation, not just some units but

every unit must control emissions to meet EPA’s acid gas or

alternative SO2 emissions standards. And, under EPA’s

interpretation, had the Agency implemented Section

112(n){1)(A) on the timetable Congress intended, with EPA

completing the required health effecta and control technologies

study within three years of 1990, every unit would have been

required under EPA’s HAP program to control SO: emissions

long before the now extraneous Title IV phase two program even

began.

14 As is the case with SO2 control equipment, which also controls

acid gas emissions (as well as mercury), control equipment for

the other two principal air pollutants that electric generators

emit, NOx and particulate matter, also reduces mercury and

trace metal emissions. See 70 Fed. Reg. at 16,003 (citing Utility

Study and other evidence to show that technologies used to

control SOz, NOx, and particulate matter also control HAPs,

including mercury).

U.S.C. §§ 7475 and 7503 (permit requirements under,

respectively, the Prevention of Significant

Deterioration and New Source Review programs). In

addition, new and modified generators must install

modern pollution equipment to meet New Source

Performance Standards (NSPS) that EPA established

under Section 7411. 40 C.F.R. Part 60, Subparts D &

Da. See 70 Fed. Reg. at 16,004 (installation of NO.

controls to meet NSPS for NO;x will reduce mercury

emissions).

Congress intensified electric generator

regulation in the 1990 CAA Amendments. In

addition to Title IV, Congress also changed the

definition of public “welfare” to encompass

transform[ed]” and “convert[ed]” air pollution so that

EPA could also address acid deposition through the

NAAQS program. 42 U.S.C. § 7602(h); Senate Report

at 76. EPA undertook rulemaking to determine

whether the secondary NAAQS for SOz and NO,

should be strengthened to address this problem given

that, as described above, those gases can convert to

sulfuric acid and nitric acid, respectively. EPA

determined that, although it believes that those

standards should be strengthened, more study is

needed to establish the appropriate level. See

Secondary National Ambient Air Quality Standards

for Oxides of Nitrogen and Sulfur, 77 Fed. Reg.

20,218, 20,263 (Apr. 3, 2012); Ctr. for Biological

Diversity v. EPA, 749 F.3d 1079 (D.C. Cir. 2014).

Similarly, Congress revised the CAA “good

neighbor” program to further expand EPA's ability to

reduce transported air pollution. EPA has now

adopted three iterations of successively more

stringent programs under this provision to reduce

electric generator emissions of SOz and NO, in the

eastern part of the country. EME Homer City

Generation, 134 U.S. at 1595-96. The latest iteration

of this program, the Cross State Air Pollution

Standards (“CSAPR”) program, reviewed by this

Court in EME Homer City Generation, will reduce the

electric sector's SO; emissions from the post-Title IV

2005 amount of 8.8 million tons to the post-CSAPR

amount of 2.4 million tons. Federal Implementation

Plans: Interstate Transport of Fine Particulate

Matter and Ozone and Correction of SIP Approvals,

76 Fed. Reg. 48,208, 48,215, Table III (Aug. 8, 2011).

CSAPR will also reduce NOx emissions from 2.6

million tons in 2005 to 1.4 million tons. Id. In

adopting the rule, EPA noted the positive result in

reducing acid deposition. Jd. at 48,218. See also 70

Fed. Reg. at 16,004 (explaining that controls that

utilities would install under the Clean Air Interstate

Rule (the predecessor program to CSAPR) would also

reduce HAP emissions).

Congress also changed the statutory visibility-

impairment program by adding 42 U.S.C. § 7492 in

order to refocus EPA from a source-specific approach

under 42 U.S.C. § 7491 to a regional approach

capable of addressing multiple and multi-state

sources of impairment. See Am. Corn Growers Ass'n

v. EPA, 291 F.3d 1, 4-5 (D.C. Cir. 2002). Congress

made electric utility emissions a particular focus of

the visibility program. 42 U.S.C. § 7491(b)(2)(B)

(requiring large electric generators to follow

mandatory EPA guidelines). EPA has targeted large

and small electric generator emissions of SOz2 and

NO,, which may impair visibility when they convert

in the atmosphere to fine particle nitrates and

sulfates. Senate Report at 275. EPA so far has

undertaken rulemaking to impose electric generator

SOz2 and NO, restrictions in at least 12 States’

located outside the 28-state region of the country that

is subject to CSAPR. For the CSAPR region, EPA has

determined that CSAPR emission reductions are

sufficient, in the near-term, to address electric

generator contributions to impaired visibility.

Regional Haze: Revisions to Provisions Governing

Alternatives to Source-Specific Best Available

Retrofit Technology (BART) Determinations, Limited

SIP Disapprovals, and Federal Implementation

Plans, 77 Fed. Reg. 33,641 (Jun. 7, 2012).

Congress’ creation of this extensive regulatory

apparatus for controlling electric generator emissions

indicates that Section 7412(n)(1)(A)’s role was far

more limited than EPA and the Panel would have it.

Rather than being the dominant and most expensive

driver of electric generator emission reductions,

Section 7412(n)(1)(A) allowed EPA to layer on

additional regulation only if “appropriate and

necessary” to address public health effects of utility

HAPs that might remain “after imposition of the

requirements” of these other programs. Given

Congress’ concern about the cost of these programs,

and given Congress’ expectation that these other

programs would reduce HAP emissions as well, 136

18 77 Fed. Reg. 72,512 (Dec. 5, 2012); 78 Fed. Reg. 46,142, (July

30, 2013) (Arizona); 77 Fed. Reg. 14,604 (Mar. 12, 2012)

(Arkansas); 77 Fed. Reg. 39,425 (July 3, 2012) (Louisiana); 77

Fed. Reg. 71,533 (Dec. 3, 2012) (Michigan); 78 Fed. Reg. 8,706

(Feb. 6, 2013) (Minnesota and Michigan); 77 Fed. Reg. 40,150

(July 6, 2012) (Nebraska); 77 Fed. Reg. 50,936 (Aug. 23, 2012)

(Nevada); 76 Fed. Reg. 52,388 (Aug. 22, 2011) (New Mexico); 77

Fed. Reg. 20,894 (Apr. 6, 2012) (North Dakota); 76 Fed. Reg.

81,728 (Dec. 28, 2011) (Oklahoma); 77 Fed. Reg. 74,355 (Dec. 14,

2012) (Utah); 79 Fed. Reg. 5,032 (Jan. 30, 2014) (Wyoming).

Cong. Rec. H12911, 12934 (daily ed. Oct. 26, 1990)

(statement of Representative Oxley), Congress cannot

reasonably be understood to have handed EPA a free

pass to regulate regardless of costs.

B. The Panel Misread Section

7412(n)(1)(A) Within Its Context in

Section 7412.

The Panel’s contextual analysis was limited to

evaluating the role of Section 7412(n)(1)(A) within

Section 7412, but here too the Panel faltered. The

Panel gave controlling weight to the fact that other

subsections of Section 7412 provide for the

consideration of costs, while Section 7412(n)(1)(A)

supposedly does not. NMA Pet. App. 23a-27a. But at

the heart of the Panel’s reasoning lies a fatal

contradiction. In parsing the provisions of Section

7412 that do or do not explicitly refer to costs, the

Panel relied most heavily on the language differences

between Sections 7412(n)(1)(A) and 7412(n)(1)(B). As

the Panel pointed out, Congress did not explicitly

direct that the Section 7412(n)(1)(A) Utility Study

should consider control costs, but it did explicitly

direct that the separate Section 7412(n)(1)(B) study of

mercury impacts should consider costs. Jd. at 1237.

But later in its opinion, the Panel found that, even

though Section 7412(n)(1)(A) does not refer to

environmental effects, EPA could consider those

effects in its “appropriate and necessary” finding

precisely because Congress provided that the Section

7412(n)(1)(B) study should examine both health and

environmental effects. Jd. at 1242. Having allowed

EPA to borrow from Section 7412(n)(1)(B) to supply

the missing authority in Section 7412(n)(1)(A) to

consider environmental effects, the Panel was

logically inconsistent in relying on the difference

between those two provisions in justifying EPA’s

decision to exclude costs under Section 7412(m)(1)(A).

Cf. Ali v. Federal Bureau of Prisons, 552 U.S. 214,

222 (2008) (statutory terms should be construed to be

“coherent and consistent”).

Indeed, considering Section 7412(n)(1)(A) and

Section 7412(n)(1)(B) together, it makes far more

sense to find that EPA, under Section 7412(nm)(1)(A),

should consider costs but may not consider

environmental effects rather than the other way

around. While Section 7412(n)(1)(A) does not

explicitly refer to costs, the Panel, NMA Pet. App.

29a, is wrong that that provision contains “no signa!”

that costs should be considered. Section

7412(n)(1)(A) requires that EPA study both health

effects and “alternative control strategies for

emissions which may warrant regulation.” A study of

control technologies logically entails considering the

cost of those technologies, as EPA concluded in the

Utility Study. Joint App. 105 (summarizing the

“degree of feasibility, cost and effectiveness” of

potential control strategies).

The Panel also concluded that EPA reasonably

decided it could ignore costs in deciding whether it is

“appropriate” to regulate because EPA can consider

costs later in the regulatory process in setting Section

7412(d) standards. NMA Pet. App. 26a-29a. As the

Panel explained, Section 7412(d) standard-setting is

a two-step process. Jd. at 1240. EPA first sets a

“MACT floor” standard based on a formula that does

not consider costs. See Section 7412(d)(3) (standards

must reflect the emissions control performance

achieved by the average of the top 12 percent

performing sources within the regulated source

category). EPA may then set a “beyond-the-floor”

standard based on a number of factors, including

costs. See Section 7412(d)(2).'*

The Panel's attribution of significance to the

possibility that EPA may consider costs in setting

“beyond-the-floor” standards misses the point that

the formula-driven “MACT floor” standards are

themselves extremely costly. This case proves that

point — with one limited exception for a small

subcategory of electric generators, EPA did not

establish “beyond-the-floor” standards,!’ yet EPA still

calculated the control costs to be $9.6 billion per year.

Thus, because EPA did not consider costs either in

determining regulation to be “appropriate” or in

setting the “MACT floor” standards, EPA imposed

these extremely large costs on the electric generation

‘6 Although EPA took the view that “Congress expreasly

precluded consideration of costs when setting MACT floors,” 77

Fed. Reg. at 9,323, the Panel stated that costs are “to some

extent” implicitly com idered in setting the MACT floor in that

the floor is based on the emissions that the best-performing

units in a source category achieve. NMA Pet. App. 29a. The

Panel’s observation of the role of costs in setting the “MACT

floor,” however, contradicts a decision of the D.C. Circuit

rendered soon after White Stallion, which held that costs are

relevant under Section 7412(d) only in setting “beyond-the-floor”

standards. NRDC v. EPA, 749 F.3d 1055, 1060 (D.C. Cir. 2014).

Moreover, even to the extent cost is implicitly considered in the

MACT floor, it cannot be assumed that all units in a large,

“broad, [and] diverse source category,” like electric generators,

70 Fed. Reg. at 15,999, can bear the coet of new controls simply

becauge a limited percentage of newer unite may be capable of

doing so.

'T EPA established beyond-the-floor” standards only for mercury

emissions from generators using low rank virgin coal (coal! with

a very low heat content). 77 Fed. Reg. at 9,369.

industry without ever taking costs into account. As

Judge Kavanaugh wrote, “[t]elling someone that costs

will be considered in a regulatory step that occurs

after they have already had to pay an exorbitant

amount and may already have been put out of

business is not especially reassuring.” Pet. App. 79a.

Finally, the Panel found that EPA’s decision

not to consider costs was consistent with Congress’

overall purpose in its 1990 redesign of Section 7412 to

“spur EPA to action” in regulating HAPs. NMA Pet.

App. 25a-26a. Given this purpose, the Panel read

Section 7412(n)(1)(A) as serving no function other

than providing EPA with a “three-year pass” to

“confirm the nature of public health hazards from

EGU [electric generator] emissions,” after which

regulation becomes mandatory. Id. at 26a.

Apart from undermining the Panels’ conclusion

that environmental impacts are relevant under

Section 7412(n)(1)(A), the Panel’s reading does not

give full effect to the fundamental differences in the

respective regulatory regimes that Congress created

for electric generator and non-electric generator HAP

emissions. Had Congress intended nothing more

than that the normal statutory regulatory process

would be triggered if EPA found that electric

generator HAPs create a health hazard, it would have

been a simple matter to direct EPA, upon making a

health hazard finding, to list generators under

Section 7412(c) and then set standards under Section

7412(d). Congress, however, did not do so. Instead, it

asked EPA to consider the results of the study and

then make the policy judgment of whether regulation

is “appropriate and necessary.” Rusello v. United

States, 464 U.S. 16, 23 (1983) (‘where Congress

includes particular language in one section of a

statute but omits it in another ... it is generally

presumed that Congress acted purposely in the

disparate inclusion or exclusion.”).

Indeed, by listing specific HAPs under Section

7412(b) and requiring EPA to regulate sources that

emit those HAPs in quantities exceeding a statutorily

defined amount, Congress presumably had already

determined that sources that emit listed HAPs above

the threshold warrant regulation. Thus, if, as the

Panel posits, Congress’ only concern in Section

7412(n)(1)(A) was to confirm that electric generator

HAP emissions create health impacts, Congress could

have made EPA’s task under Section 7412(n)(1)(A)

much simpler. Instead of requiring a full-blown,

complex health effects and control technologies study

that ultimately took eight years to complete,

Congress could have simply instructed EPA to

determine whether electric generators, after other

CAA regulation, emit HAPs above the statutory

threshold. Whitfield v. United States, 543 U.S. 209,

215 (2005) (‘Had Congress intended to create the

scheme petitioners envision, it would have done so in

clearer terms.”).

The fact that, for electric generators, Congress

wanted a health-effects and control-technology study,

and directed regulation only where “appropriate and

necessary,” indicates that Congress wanted EPA to

do something more than determine whether electric

generator HAP emissions create health effects. See

Roberts v. Sea-Land Servs., 132 S. Ct. 1350, 1357

(2012) (Differences in parallel statutory schemes

demonstrate a different congressional intent for

each). The something “more” that Congress wanted

is dictated by Congress’ use of the word

“appropriate.” Congress wanted EPA to understand

the extent of any health effects and, based on that

understanding, to make a value judgment: given the

health effects, is regulation justified? That judgment

necessarily involves considering costs as well as

benefits. See Entergy Corp. v. Riverkeeper, Inc., 556

U.S. 208, 232 (2009) (“Every real choice requires a

decisionmaker to weigh advantages against

disadvantages, and disadvantages can be seen in

terms of (often quantifiable) costs.”).

il. Alternatively, Regardless of EPA’s

Treatment of Other HAPs, EPA’s Refusal

to Consider Costs in Deciding to Regulate

Acid Gases Was Unreasonable and Makes

EPA’s Acid Gas Regulation Unlawful.

Petitioner submits that, for the reasons stated

above, EPA’s decision to ignore costs in deciding to

regulate electric generator HAPs was unreasonable

and renders the MATS rule as a whole unlawful.

The particular irrationality of EPA’s determination

that it is “appropriate and necessary” to regulate acid

gases under Section 7412(n)(1)(A), however, provides

an independent reason to find that EPA has

unlawfully regulated those gases. As to acid gases

specifically, EPA is attempting to regulate emissions

that it cannot show are a significant risk to the public

health or environment in order to accomplish an

objective that Congress did not authorize, while

asserting a legal theory that would justify regulation

for no reason.

A. Failing to Consider Costs in

Deeming It Appropriate to Regulate

Acid Gases Is Not Remotely

Defensible.

As noted above, although the Panel concluded

that the purpose of Section 7412(n)(1)(a) was to allow

EPA to “confirm the nature of public health hazards

from EGU [electric generator] emissions,” NMA Pet.

App. 29a., neither the Utility Study, Joint App. 105,

nor the only study that EPA subsequently performed

of the health risks of electric generator acid gas

emissions, 70 Fed. Reg. at 16,007, found any such

risks. Rather, as noted, EPA conceded that acid

gases do not create a significant health risk. 76 Fed.

Reg. at 25,016. The best EPA could do in the

regulatory preamble as to health impacts was to

express “concern[]” that acid gases in general are

known to “contribute to chronic non-cancer toxicity,”

without making any finding that acid gases in the

quantities emitted by electric generators pose a

meaningful risk of doing so. Jd. The only actual

analysis EPA performed to determine whether acid

gas emissions from electric generators create a health

concern concluded that “individuals are not exposed

to acid gas emissions from Utility Units at

concentrations which pose hazards to public health.”

70 Fed. Reg. at 16,007.

Even EPA’s findings as (to possible

environmental impacts of electric generator acid gas

emissions lacked a substantive foundation. EPA's

“evidence” of the environmental impacts of these

emissions consists of EPA’s general claim that “[i]n

areas where the deposition of acids derived from

emissions of sulfur and NO, are causing aquatic

and/or terrestrial acidification, with accompanying

ecological impacts, the deposition of hydrochloric acid

could exacerbate these impacts.” 76 Fed. Reg. at

25,050 (emphasis added). That may be true, but it

does not prove — or even lead to an inference — that

electric generators emit acid gases in sufficient

amounts, given EPA’s other regulations, to create a

material environmental concern. The Utility Study

did not conclude that electric generator acid gas

emissions resulted in environmental harm, Joint

App. 105, and EPA did not conduct any further study

of possible environmental impacts of electric

generator acid gas emissions.

The only acid gas study that EPA relied on was

one study of hydrochloric acid deposition in the

United Kingdom, which EPA cites for the proposition

that (a) hydrochloric acid is highly mobile in the

environment, (b) hydrochloric acid can transport

longer distances than previously thought, and (c)

hydrochloric acid can be a larger driver of

acidification than previously thought. 77 Fed. Reg. at

9,362. EPA, however, did not even try to analyzé the

impact, if any, of electric generator emissions of

hydrochloric acid in the United States and, as a

result, could not point to even a single instance in

which domestic electric generator hydrochloric acid

emissions have affected acid deposition anywhere or

otherwise created an environmental impact. See alsu

Joint App. 414-18 (EPRI’s comments discussing why

this United Kingdom study is not relevant).

In fact, the “evidence” on which EPA most

relied in concluding that acid gases are worthy of

regulation is that acid gases are listed under Section

7412(b) and that electric generators emit more

hydrogen chloride and hydrogen fluoride than other

source categories. 76 Fed. Reg. at 25,005. But those

facts, in and of themselves, are not significant given

that those emissions, even when combined with

directly emitted acid gas emissions from all other

sources, do not represent a meaningful percentage of

emissions that have the potential to result in

acidification,. Joint App. 413-14, 419-20. Moreover,

as also discussed, in contrast with other source

categories, the fact that electric generators emit a

listed HAP in an amount above the statutorily

defined threshold, standing alone, cannot furnish a

sufficient basis under Section 7412(n)(1)(A) for EPA

to regulate. EPA may regulate only if it makes an

“appropriate and necessary” finding.

Again, Congress could have adopted a different

regulatory structure to address electric generator

acid gas emissions, one that, like the NAAQS system,

would require regulation on a bare finding, without

considering costs, that those emissions “cause or

contribute to air pollution which may reasonably be

anticipated to endanger public health or welfare.” 42

U.S.C. § 7408(a). It is doubtful, even with the

deference courts give agencies in making scientific

determinations within their areas of expertise, Balt.

Gas & Elec. Co. v. NRDC, 462 U.S. 87, 103 (1983),

that EPA would be justified in making that finding

for electric generator acid gas emissions given the

meager record here. But, of course, Congress adopted

a different regulatory scheme in Section 7412(n)(1)(A)

and called on EPA both to study health effects and

control technologies and to make a policy judgment as

to whether regulation is “appropriate.” The judgment

EPA made as to acid gases is untenable. Ignoring

costs, while forcing industry to spend about half of

$9.6 billion every year for no health benefit, for no

quantifiable environmental benefit, and to address

only the vaguest notion that acid gas emissions could

“contribute” in some unknown amount to acid

deposition impacts that may remain after compliance

with the landmark Title IV program — a program that

was founded on the principle that acid deposition

regulation should be cost-effective — was not a

reasonable decision.

Indeed, EPA’s decision is so far-fetched that it

can be understood only in light of the Agency’s desire

to achieve the billions in co-benefits that EPA sees in

reducing SOz emissions.'® See 77 Fed. Reg. at 9,305-

06. As noted, even if EPA could prove that these

benefits actually exist,!® virtually all of them derive

from the controls that utilities must install to meet

EPA’s acid gas standard (or its surrogate SOs

standard). See supra at n. 10. Were these co-benefits

relevant to the “appropriateness” finding (and if EPA

could prove that these benefits actually exist), EPA

might have a case to regulate. But the co-benefits are

not relevant — the Agency conceded that it cannot and

18 See, e.g. EPA’s press release announcing the rule, which leads

with the co-benefits the rule will supposedly create.

http://yosemite.epa.gov/opa/admpress.nsf/bd4379a92ceceeac8525

735900400c27/bd8b3f37edf57 16d8525796d005dd086! OpenDocu

ment (last visited January 16, 2015).

19 EPA’s claim of tens of billions of dollars of health co-benefits

from reducing atmospheric PMezs concentrations is curious

because EPA concedes that most of these benefits supposedly

result from reducing PMz.s concentrations to below the level that

EPA set in ite PMas NAAQS. 77 Fed. Reg. at 9,431. But EPA

set the PM2.s5 NAAQS, as it set all of the NAAQS, at a level that

is “requisite to protect the public health” with a margin of safety

and without considering compliance costa. 42 U.S.C. §

7409(b)(1).

thus did not rely on those co-benefits in providing the

legal rationale for its decision. 77 Fed. Reg. at 9,320.

As EPA likely recognized, any attempt to rely on

these non-HAP benefits would have run afoul of

Motor Vehicle Manufacturers Ass'n v. State Farm

Mutual Auto. Insurance Co., 463 U.S. 29, 463 (1983)

(“Normally, an agency rule would be arbitrary and

capricious if the agency has relied on factors which

Congress has not intended it to consider.”).

In sum, whatever EPA’s true motives are, its

decision to regulate electric generator acid gas

emissions was manifestly unreasonable unless EPA

can persuade that Congress, by directing it to

regulate if “appropriate,” gave it power to regulate on

the barest of records of environmental harm and no

matter the costs. That breathtakingly expansive

delegation of power is, to say the least, unlikely.

B. EPA’s Decision to Regulate Acid Gas

Emissions Did Not Become

Reasonable Simply Because the

Agency Chose to Regulate Other

Electric Generator HAPs.

Perhaps recognizing the difficulty of defending

its decision to regulate acid gas emissions on a stand-

alone basis, the Agency alternatively claimed that the

Act does not require it to find that it is “appropriate

and necessary” to regulate those emissions in order

for EPA to do so. 77 Fed. Reg. at 9,361. Instead,

EPA maintained that it can piggyback on an

“appropriate and necessary” finding that it makes for

another electric generator HAP. Id. Citing Nat?

Lime Ase’n v. EPA, 233 F.3d 625 (D.C. Cir. 2000),

EPA stated that once it regulates any hazardous air

pollutant emitted by electric generators under

Section 7412, it must regulate all such pollutants. Id.

Thus, EPA’s view is that even if it conceded that

electric generator acid gas emissions pose no threat to

the public health or environment at all, the Agency

could still regulate them - indeed, it must regulate

them — if it finds that it is “appropriate and

necessary’ to regulate one other electric generator

HAP. 77 Fed. Reg. at 9,361 (The EPA concluded

that we must find it “appropriate” to regulate EGUs

under CAA section 112 if we determine that a single

HAP emitted from EGUs poses a hazard to public

health or the environment.”). The Panel agreed.

NMA Pet. App. 37a-41a.

The Panel and EPA, however, failed to account

for the different regulatory structure in National

Lime as compared with Section 7412(n)(1)(A). In

National Lime, in affirming EPA’s regulation of all of

the source category's HAP emissions, the court relied

on the fact that Congress had listed all the HAPs that

EPA regulated. National Lime, 233 F.3d at 634 (EPA

must set emission standards “for each listed HAP”).

As described above, however, for electric generators,

the mere listing of a HAP is insufficient to justify

regulation. EPA must still make an “appropriate and

necessary” finding.

Moreover, regulation under Section

7412(m)(1)(A) is pollutant-specific. The study that

Section 7412(n)(1)(A) requires as a precondition to

regulation includes reporting on control strategies

“for emissions which may warrant regulation under

this section.” Since Congress directed EPA to

regulate based on the results of that study, Congress

must have intended that EPA regulate emissions that

warrant regulation and, logically enough, not

regulate emissions that do not warrant regulation.

Hibbs v. Winn, 542 U.S. 88, 101 (2004) (statutory

term must be given meaning in the context of the

words around it).

Thus, the Panel erred in saying that “[t]he

notion that EPA must ‘pick and choose’ among HAPs

in order to regulate only those substances it deems

most harmful is at odds with the court’s precedent.”

NMA Pet. App. 39a (emphasis added). It is not a

question of some substances being more harmful than

others; it is a question of whether EPA may regulate

electric generator acid gas emissions without having

to show that it is “appropriate and necessary” to do

so. Surely, given that Congress did not predetermine

that these emissions create public health or

environmental impacts and instead left that

determination to EPA — and given that Congress gave

EPA discretion to judge whether it is appropriate and

necessary to regulate even if it found a health impact

— the Agency cannot regulate unless it can show a

meaningful impact. See Coal. For Responsible

Regulatic « v. EPA, 684 F.3d 102, 135 (D.C. Cir. 2012)

(“fiJt is absurd to think that Congress intended to

subject stationary sources to the PSD permitting

requirements due to emissions of substances that do

not ‘endanger the public health or welfare.””).

CONCLUSION

The Court should vacate the MATS rule.

Respectfully submitted,

CARROLL W. MCGUFFEY III PETER S. GLASER

JUSTIN T. WONG (Counsel of Record)

TROUTMAN SANDERS LLP TROUTMAN SANDERS LLP

600 PEACHTREE STREET, NE 401 NINTH STREET N.W.

SUITE 5200 SUITE 1000

ATLANTA, GA 30308-2216 WASHINGTON, D.C. 20004

202-274-2998

Peter.glaser@

troutmansanders.com

January 20, 2014 Counsel for Petitioner

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.